On 12 August, a Commonwealth Bank dealer in Melbourne concluded a transaction with a Citibank dealer in New York. The former agreed to buy from the latter USD5,000,000 at an exchange rate (AUD/USD) of 0.50 for delivery on 14 August. On the delivery date, the exchange rate rose to 1.83. How much would the Commonwealth Bank be required to pay to settle the transaction?
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On 12 August, a Commonwealth Bank dealer in Melbourne concluded a transaction with a Citibank dealer in New York. The former agreed to buy from the latter USD5,000,000 at an exchange rate (AUD/USD) of 0.50 for delivery on 14 August. On the delivery date, the exchange rate rose to 1.83. How much would the Commonwealth Bank be required to pay to settle the transaction?
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- On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 100,000 FCUs with payment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 100,000 FCUs. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply: Date Spot rate Forward rate (to April 30, 2018) November 1, 2017 $0.21 $0.20 December 31, 2017 0.19 0.17 April 30, 2018 0.18 N/A Bernard’s incremental borrowing rate is 12 percent. The present value factor for four months at an annual interest rate of 12 percent (1 percent per month) is 0.9610.a. Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract.b. What is the impact on net income in 2017?c. What is the impact on net income in 2018?On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 180,000 FCUS with payment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 180,000 FCUS. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply: Forward Rate Spot Rate $0.29 Date (to April 30, 2018) $ 0.28 November 1, 2017 December 31, 2017 April 30, 2018 0.27 0.25 0.26 N/A Bernard's incremental borrowing rate is 12 percent. The present value factor for four months at an annual interest rate of 12 percent (1 percent per month) is 0.9610. a. Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. b. What is the impact on net income in 2017? C. What is the impact on net income in 2018? Complete this question by entering your answers in the tabs below. Req A Req B and C Prepare all…On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 100,000 FCUs with payment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 100,000 FCUs. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply:Bernard’s incremental borrowing rate is 12 percent. The present value factor for four months at an annual interest rate of 12 percent (1 percent per month) is 0.9610.a. Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract.b. What is the impact on net income in 2017?c. What is the impact on net income in 2018?
- On November 1, 2023, Cheng Company (a U.S.-based company) forecasts the purchase of goods from a foreign supplier for 310,000 yuan. Cheng expects to receive the goods on April 30, 2024, and make immediate payment. On November 1, 2023, Cheng enters a six-month forward contract to buy 310,000 yuan. The company properly designates the forward contract as a cash flow hedge of a forecasted foreign currency transaction. Forward points excluded in assessing hedge effectiveness and amortized to net income using a straight-line method on a monthly basis over the life of the contract. The following U.S. dollar–Yuan exchange rates apply: Date Spot Rate Forward Rate (to April 30, 2024) November 1, 2023 $ 0.42 $ 0.405 December 31, 2023 0.41 0.380 April 30, 2024 0.39 N/A As expected, Cheng receives goods from the foreign supplier on April 30, 2024, and pays 310,000 yuan immediately. Cheng sells the imported goods in the local market in May 2024. Required: Prepare all journal entries,…On May 8, 2019, Jett Company (a U.S. company) made a credit sale to Lopez (a Mexican company). The terms of the sale required Lopez to pay 800,000 pesos on February 10, 2020. Jett prepares quarterly financial statements on March 31, June 30, September 30, and December 31. The exchange rates for pesos during the time the receivable is outstanding follow. Compute the foreign exchange gain or loss that Jett should report on each of its quarterly income statements for the last three quarters of 2019 and the first quarter of 2020. Also compute the amount reported on Jett’s balance sheets at the end of each of its last three quarters of 2019. May 8, 2019 . $0.1323 June 30, 2019 . 0.1352 September 30, 2019 . 0.1368 December 31, 2019 0.1335 February 10, 2020 . 0.1386The spot foreign exchange rate for the US dollar is 0.69056 Euros. Yourcompany agrees to pay a bank 63,694 Euros in 3 months in exchange for 100,000US dollars. This is a foreign currency forward contract. No cash is exchanged upfront. Give the underlying asset, the maturity date, and the forward rate (for theUS dollar). Compare to the spot forward rate. Conclude
- On November 1, 2020, Cheng Company (a U.S.-based company) forecasts the purchase of goods from a foreign supplier for 100,000 yuan. Cheng expects to receive the goods on April 30, 2021, and make immediate payment. On November 1, 2020, Cheng enters into a six-month forward contract to buy 100,000 yuan. The company properly designates the forward contract as a cash flow hedge of a forecasted foreign currency transaction. Forward points are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis over the life of the contract. The following U.S. dollar–Yuan exchange rates apply: Date Spot Rate Forward Rate(to April 30, 2021) November 1, 2020 $ 0.21 $ 0.195 December 31, 2020 0.19 0.170 April 30, 2021 0.18 N/A As expected, Cheng receives goods from the foreign supplier on April 30, 2021, and pays 100,000 yuan immediately. Cheng sells the imported goods in the local market in May 2021.…A UK importer contracts to pay 18 million Yen for raw material from a supplier in Japan on one month's credit. The importer arranges with his bank to cover the transaction in sterling on the forward exchange market. The following rates are quoted to him (in Yen/£): Spot rate 247.45 - 247.75 1 month forward 248.00 – 248.80 What will be the cost of the shipment in sterling?On November 1, 2020, Cheng Company (a U.S.-based company) forecasts the purchase of goods from a foreign supplier for 130,000 yuan. Cheng expects to receive the goods on April 30, 2021, and make immediate payment. On November 1, 2020, Cheng enters into a six-month forward contract to buy 130,000 yuan. The company properly designates the forward contract as a cash flow hedge of a forecasted foreign currency transaction. Forward points are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis over the life of the contract. The following U.S. dollar–Yuan exchange rates apply: Date Spot Rate Forward Rate (to April 30, 2021) November 1, 2020 $ 0.24 $ 0.225 December 31, 2020 0.23 0.200 April 30, 2021 0.21 N/A As expected, Cheng receives goods from the foreign supplier on April 30, 2021, and pays 130,000 yuan immediately. Cheng sells the imported goods in the local market in May 2021. Prepare all journal entries, including…
- On December 20, 2023, Momeler Company (a U.S.-based company) sold parts to a foreign customer at a price of 195,000 rials. Payment is received on January 10, 2024. Currency exchange rates are as follows: Date December 20, 2023 December 31, 2023 January 10, 2024 U.S. Dollar per Rial. a. The rial receivable exchange b. The nial receivable exchange $1.29 1.26 1.22 Required: a. How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeler's 2023 income statement? b. How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier's 2024 income statement? in U.S. dollar value, resulting in a foreign of in 2023 in U.S. dollar value, resulting in a foreign of in 2024The White Dove company, whose year ends 31 December, buys some goods from Ranka of France on 30 September. The invoice value is €40,000 and is due for settlement in equal instalments on 30 November and 31 January. The exchange rate is as follows: 30 September A$1.00 = €1.60 30 November A$1.00 = €1.80 31 December A$1.00 = €1.90 31 January A$1.00 = €1.85 Required: Record the relevant journal entries in the books of White Dove.On December 20, 2017, Butanta Company (a U.S. company headquartered in Miami, Florida) sold parts to a foreign customer at a price of 50,000 ostras. Payment is received on January 10, 2018. Currency exchange rates for 1 ostra are as follows:a. How does the fluctuation in exchange rates affect Butanta’s 2017 income statement?b. How does the fluctuation in exchange rates affect Butanta’s 2018 income statement?